That's basically what I did with my old dell. With normal windows OS, you get more usage out of the system as well.

Click to expand...

Same, took an old desktop I found off the street, stuck in a new 3Tb WD Red hard drive and put Windows Homeserver 2011 on it. It does a lot more that a standard NAS and allows more flexibility. I use my file server for crunching when it's not doing anything (so most of the time). It's also extremely easy to upgrade components such as hard drives. A 4 bay NAS can cost a lot but a case with 8 hard drive bays costs around $80 ish dollars. I was lucky and the computer I found had a raid card in it and 6 sata ports. Dual Gigabit ports was nice as well

FreeNAS does exactly that with your old hardware - http://www.freenas.org/ - and doesn't need anything fancy to run and the software costs nothing. You'll also get all the nice NAS tools you don't normally get as standard with a general purpose OS, such as email alerting. There are also others, such as OpenMediaVault and OpenFiler.

If you don't have much old hardware, then the next cheapest is to buy an unpopulated NAS case and fill it yourself, though most don't mix 2.5/3.5" drives. 4 bay systems are typically around £90+

okay.. looks like using an old PC for NAS seems to be the best alternative

now, I do not have an old/spare PC

however, I'm in the process of building (not personally) a HTPC which handles htpc and server (for dev) activities ...
so, does it make good sense to build a FreeNAS on it (with the drives which connected externally via USB or does it have to be internal?)

There is nothing wrong with using a HTPC as a NAS as well. Most people do. How the drive is connected is up to you, but I would avoid USB 2.0. If you are just storing data on it that should be fine, but USB 3.0 or internal would be much better.

That should work out of for your secondary system. FreeNAS supports plugins for media streaming, audio streaming, and can use XMBC for a HTPC experience. Dev server should be doable, but may take some work.